Greenville Utilities Commission Financial and Operating Information, FY 2016

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1 The Electric System The Utilities Commission operates an electric distribution system serving the City of Greenville and approximately seventy five percent (75%) of the rural portion of Pitt County with 66,252 connections. The Utilities Commission s electric system is the second largest municipal electric system in the State, both in terms of number of customers served and quantity of electricity purchased and distributed. The Utilities Commission s electric system service area runs north close to the Town of Robersonville, south to the Town of Ayden, east to the Town of Grimesland and west beyond the Town of Falkland. In addition, the Utilities Commission provides electricity wheeling service to the Town of Winterville, which has a separate purchase agreement with Duke Energy Progress ( DEP ). Neighboring areas are primarily served by North Carolina Power or DEP. The electric system consists of 77 miles of high voltage transmission lines at 115,000 and 34,500 volts, as well as 1,195 miles of overhead distribution lines, 1,629 miles of underground distribution lines at 12,470 volts and 85 miles of fiber optic lines. In addition, the electric system consists of 19 distribution substations with a combined base rating capacity of 560 megavolt amps (MVA), two subtransmission substations with a combined base rating capacity of 50 MVA, and two 115 kv transmission substations with a combined base load capacity of 480 MVA. The Utilities Commission is a leader in the State in residential load management and has device controls for an estimated 41,671 appliances including customer heat pumps, air conditioners, water heaters and electric furnaces. Approximately 30% of the Utilities Commission s residential customers currently participate in this program. North Carolina Eastern Municipal Power Agency. The Utilities Commission and 31 other North Carolina municipalities are members ( Participants ) of the North Carolina Eastern Municipal Power Agency ( Power Agency ), a joint agency created by the Participants pursuant to the laws of the State. During the late 1970s and 1980s, Power Agency entered into arrangements with an investor owned utility and others under which Power Agency had a joint ownership interest in three nuclear and two coal fired generating facilities. Power Agency financed its ownership interest through the issuance of its revenue bonds, which were mostly payable from revenues from the sale by Power Agency of power to the Participants. Power Agency and the Participants entered into a series of agreements under which Power Agency became the wholesale power provider to the Participants. In July 2015, Power Agency completed arrangements for the sale of substantially all of its electric generating assets to DEP for approximately $1.25 billion. The proceeds from the sale were used, together with certain reserves held by Power Agency and the proceeds of a new $421,430,000 bond issue by Power Agency to defease the debt related to the generating assets. In connection with the sale by Power Agency of the generating assets, Power Agency and each Participant entered into two new agreements. First, Power Agency and each Participant entered into a Full Requirements Power Sales Agreement, under which the Participant will purchase its full requirements bulk power supply, net of certain other resources, from Power Agency. Second, Power Agency and each Participant entered into a Debt Service Support Contract, under which the Participant agreed to pay its share of the amount necessary for Power Agency to pay all debt service payments on the new bonds issued by Power Agency to fund the balance of the defeasance costs of Power Agency s prior bonds. Payments under the Debt Service Support Contracts are due through July In order to have the electric power resources to meet its obligations to the Participants under the Full Requirements Power Sales Agreements, Power Agency entered into an additional agreement with DEP for DEP to sell to Power Agency, and Power Agency to purchase from DEP, power and energy in the amounts required by Power Agency to serve the current and future electrical loads of the Participants. The new Full Requirements Power Sales Agreements are take and pay contracts, and the direct liability 1

2 associated with the operation and decommissioning of the nuclear and coal generation assets have been eliminated. The transaction by Power Agency reduced Power Agency s debt allocable to the Utilities Commission s from approximately $277.8 million to $85 million. Under the new arrangements, part of the reduction in debt service payments on its bonds by Power Agency will be replaced by payments to be paid to DEP under the Full Requirements Power Sales Agreements, which will be passed to the Participants in wholesale power costs. Nevertheless, the reduced debt service costs and the lower costs of wholesale power allowed the Utilities Commission to reduce its electric retail rates by 7% effective August 1, 2015 with a further 4% reduction in electric retail rates effective on July 1, The Utilities Commission, together with the other 31 Participants, is also a member of ElectriCities of North Carolina, Inc. ( ElectriCities ), a joint municipal agency serving the interests of municipal electrical systems. There are currently 91 members of ElectriCities, including municipalities and university systems from North Carolina, South Carolina and Virginia. Electric Service Rates. Electric service rates are the same for customers inside and outside the City limits. Electric service rates (residential, seasonal and general service) in effect on June 30, 2016, are set forth below. All rates are currently subject to a 7% State sales tax. Residential Service Basic facilities charge (per billing month) $13.00 Energy charges (per kwh) $ Residential Time of Use with Demand Net Metering for Solar Energy Facilities 1 Basic facilities charge (per billing month) $19.47 Demand charges (per kw) Energy charges (per kwh) $ all on peak kwh $ all off peak kwh $ Small General Service 2 Basic facilities charge (per billing month) $21.00 Energy charges (per kwh) 1. first 1,000 kwh $ next 5,000 kwh $ all additional kwh $ Medium General Service 3 Basic facilities charge (per billing month) $50.00 Demand charges (per kw) 1. first 35 kw No charge 2. all additional kw $4.17 Energy charges (per kwh) 1. first 12,500 kwh $ all additional kwh $

3 Medium General Service Coincident Peak4 Base facilities charge (per billing month) $50.00 kw demand charges (per kw) 1. all coincident peak demand5 $ allocated non coincident peak demand $ all non coincident peak demand in excess of allocation $5.38 rkva demand charges 6 (per rkva) $0.25 Energy charges (per kwh) $ Large General Service 7 Basic facilities charge (per billing month) $ kw demand charges (per kw) 1. all coincident peak demand 5 $ allocated non coincident peak demand $ excess non coincident peak demand $6.82 rkva demand charges 6 (per rkva) $0.25 Energy charges (per kwh) $ Bilateral Metering for Solar Energy Facilities Basic facilities charge (per billing month) 1. Residential $ Small General Service $ Medium General Service $33.00 Energy credit (per kwh) $0.07 Public Communications Network Device Service Basic facilities charge (per billing month) $2.10 Energy charges (per kwh) 1. wireless IP network device $ public safety cameras $ CAD 12 ONU installations $ MLU 48 ONU installations $5.26 Outdoor Lighting Service (rate per unit per month) General Customers 175W (7,000 lumens) mercury vapor $ W (11,000 lumens) mercury vapor $ W (20,000 lumens) mercury vapor $ W (8,500 lumens) high pressure sodium $ W (14,000 lumens) high pressure sodium $ W (23,000 lumens) high pressure sodium $ W (45,000 lumens) high pressure sodium $ W F (45,000 lumens) high pressure sodium $ W (40,000 lumens) metal halide $ W F (40,000 lumens) metal halide $ W (4,500 lumens) light emitting diode (LED) $ W (5,000 lumens) light emitting diode (LED) $ W (8,000 lumens) light emitting diode (LED) $ W (13,500 lumens) light emitting diode (LED) $ W F (20,000 lumens) light emitting diode (LED) $

4 Outdoor Lighting Service (rate per unit per month) County, Municipal or Housing Authority 175W (7,000 lumens) mercury vapor $ W (11,000 lumens) mercury vapor $ W (20,000 lumens) mercury vapor $ W T (20,000 lumens) mercury vapor $ W (8,500 lumens) high pressure sodium $ W (14,000 lumens) high pressure sodium $ W (23,000 lumens) high pressure sodium $ W (45,000 lumens) high pressure sodium $ W F (45,000 lumens) high pressure sodium $ W (40,000 lumens) metal halide $ W F (40,000 lumens) metal halide $ W (4,500 lumens) light emitting diode (LED) $ W (5,000 lumens) light emitting diode (LED) $ W (8,000 lumens) light emitting diode (LED) $ W (13,500 lumens) light emitting diode (LED) $ W F (20,000 lumens) light emitting diode (LED) $35.19 Rural Street Lighting Service (rate per customer per month) 175W (7,000 lumens) mercury 6 customers $ W (14,000 lumens) sodium 8 customers $ W (5,000 lumens) light emitting diode 8 customers $2.51 Sports Field Lighting Service Basic facilities charge (per billing month) $21.00 Demand (per kw) $2.00 Energy charges (per kwh) $ Experimental rate for customers with solar energy facilities. 2 Small general service customers are typically less than 35 kw. 3 Medium general service customers are typically greater than 35 kw but less than 750 kw. 4 Medium general service coincident peak customers are typically greater than 35 kw but less than 750 kw with some form of demand control capability, such as peaking generators, that operate in conjunction with the Utilities Commission s load management program. 5 Coincident peak demand is the charge for customer s portion (in kw) of the Utilities Commission s 60 minute peak demand during each billing cycle. 6 rkva is a charge by the Utilities Commission to certain large customers based upon a measurement of the amount of electric energy flowing alternatively to the customer and away from the customer. 7 Large general service coincident peak customers are typically greater than 750 kw. Electric service rates effective July 1, 2016 are set forth below. Residential Service Basic facilities charge (per billing month) $15.00 Energy charges (per kwh) $

5 Residential Time of Use with Demand Net Metering for Solar Energy Facilities 1 Basic facilities charge (per billing month) $21.47 Demand charges (per kw) Energy charges (per kwh) $ all on peak kwh $ all off peak kwh $ Small General Service 2 Basic facilities charge (per billing month) $21.00 Energy charges (per kwh) 1. first 1,000 kwh $ next 5,000 kwh $ all additional kwh $ Medium General Service 3 Basic facilities charge (per billing month) $50.00 Demand charges (per kw) 1. first 35 kw No charge 2. all additional kw $4.17 Energy charges (per kwh) 1. first 12,500 kwh 2. $ all additional kwh 3. $ Medium General Service Coincident Peak 4 Base facilities charge (per billing month) $50.00 kw demand charges (per kw) 1. all coincident peak demand5 2. $15.00 allocated non coincident peak demand $15.61 all non coincident peak demand in excess of allocation $5.38 rkva demand charges 6 (per rkva) $0.25 Energy charges (per kwh) $ Large General Service 7 Basic facilities charge (per billing month) $ kw demand charges (per kw) 1. all coincident peak demand 5 $ allocated non coincident peak demand $ excess non coincident peak demand $6.82 rkva demand charges 6 (per rkva) $0.25 Energy charges (per kwh) $ Bilateral Metering for Solar Energy Facilities Basic facilities charge (per billing month) 1. Residential $ Small General Service $ Medium General Service $33.00 Energy credit (per kwh) $

6 Public Communications Network Device Service Basic facilities charge (per billing month) $2.10 Energy charges (per kwh) 1. wireless IP network device $ public safety cameras $ CAD 12 ONU installations $ MLU 48 ONU installations $5.05 Outdoor Lighting Service (rate per unit per month) General Customers 175W (7,000 lumens) mercury vapor $ W (11,000 lumens) mercury vapor $ W (20,000 lumens) mercury vapor $ W (8,500 lumens) high pressure sodium $ W (14,000 lumens) high pressure sodium $ W (23,000 lumens) high pressure sodium $ W (45,000 lumens) high pressure sodium $ W F (45,000 lumens) high pressure sodium $ W (40,000 lumens) metal halide $ W F (40,000 lumens) metal halide $ W (4,500 lumens) light emitting diode (LED) $ W (5,000 lumens) light emitting diode (LED) $ W (8,000 lumens) light emitting diode (LED) $ W (13,500 lumens) light emitting diode (LED) $ W (24,000 lumens) light emitting diode (LED) $ W F (25,000 lumens) light emitting diode (LED) $38.04 Outdoor Lighting Service (rate per unit per month) County, Municipal or Housing Authority 175W (7,000 lumens) mercury vapor $ W (11,000 lumens) mercury vapor $ W (20,000 lumens) mercury vapor $ W T (20,000 lumens) mercury vapor $ W (8,500 lumens) high pressure sodium $ W (14,000 lumens) high pressure sodium $ W (23,000 lumens) high pressure sodium $ W (45,000 lumens) high pressure sodium $ W F (45,000 lumens) high pressure sodium $ W (40,000 lumens) metal halide $ W F (40,000 lumens) metal halide $ W (4,500 lumens) light emitting diode (LED) $ W (5,000 lumens) light emitting diode (LED) $ W (8,000 lumens) light emitting diode (LED) $ W (13,500 lumens) light emitting diode (LED) $ W (24,000 lumens) light emitting diode (LED) $ W F (25,000 lumens) light emitting diode (LED) $34.24 Rural Street Lighting Service (rate per customer per month) 175W (7,000 lumens) mercury 6 customers $ W (14,000 lumens) sodium 8 customers $ W (5,000 lumens) light emitting diode 8 customers $2.31 6

7 Sports Field Lighting Service Basic facilities charge (per billing month) $21.00 Demand (per kw) $2.00 Energy charges (per kwh) $ Experimental rate for customers with solar energy facilities. 2 Small general service customers are typically less than 35 kw. 3 Medium general customers are typically greater than 35 kw but less than 750 kw. 4 Medium general service coincident peak customers are typically greater than 35 kw but less than 750 kw with some form of demand control capability, such as peaking generators, who operate in conjunction with our load management program. 5 Coincident peak demand is the charge for customer s portion (in kw) of the Utilities Commission s 60 minute peak demand during each billing cycle. 6 rkva is a charge by the Utilities Commission to certain large customers based upon a measurement of the amount of electric energy flowing alternatively to the customer and away from the customer. 7 Large general service coincident peak customers are typically greater than 750 kw. Number of Connections. The table below shows the number of electric system connections by class served at the end of each of the most recent five fiscal years ended June 30: At June 30 Residential Commercial Industrial Wheeling Total ,117 7, , ,602 7, , ,880 7, , ,532 7, , ,398 7, ,252 Kilowatt Hours Sales and Peak Demand. The table below sets forth sales in kilowatt hours and annual peak demand in kilowatts for each of the most recent five fiscal years: Fiscal Year Ended June 30 Class of Account Total Sales (000 kwh) Peak Demand (kw) Residential (000 kwh) Commercial (000 kwh) Industrial (000 kwh) , , ,829 1,632, , , , ,145 1,656, , , , ,349 1,684, , , , ,374 1,709, , , , ,519 1,685, ,856 7

8 Major Users. The following table presents information on the ten major users of the electric system (by revenues) during the fiscal year ended June 30, 2016 TEN LARGEST ELECTRIC ACCOUNTS Fiscal Year ended June 30, 2016 Customer Product/Service Revenues % of Total Annual kwh % of Total Patheon Pharmaceuticals $6,488, % 92,342, % Vidant Health* Health Care 5,031, ,655, DSM Dyneema, LLC High Performance Fibers 4,747, ,555, East Carolina University* Education 4,328, ,366, Attends Healthcare Products Medical Products 3,376, ,438, East Carolina University* Education 2,883, ,011, East Carolina University* Education 1,868, ,708, ASMO of Greenville Automotive Parts 1,647, ,480, Vidant Health* Health Care 1,569, ,676, Hyster Yale Group Fork Lift Trucks 1,306, ,352, $33,247, % 451,586, % * Customers having separate accounts for different locations are listed separately. The Water System The Utilities Commission operates a water treatment and distribution system that serves the City and a portion of Pitt County. The distribution system currently consists of approximately 629 miles of line with 35,599 connections. Raw water is supplied by the Tar River and eight deep wells. River modeling indicates the Utilities Commission may be able to realize an average day withdrawal of 128 million gallons per day (MGD) from the Tar River, as compared to the current average day withdrawal of MGD. Treatment is accomplished through a modern water treatment plant placed in operation in 1983 and expanded in 2002 with a present capacity of 22.5 million gallons per day. With the 2.0 MGD peaking capacity of the supplemental supply from the eight deep wells, the total peak day capacity of the water system is 24.5 MGD. Average daily water use in the fiscal year ended June 30, 2016 was MGD, with a maximum daily usage of MGD. Approximately 84.7% of the water system s 35,599 connections are located within the City limits. The North Carolina Department of Environmental Quality ( NCDEQ ) regulates the quality of water sold by the Utilities Commission to its customers, and the water treatment plant operates in compliance with NCDEQ regulations. The water system meets the current standards of the Federal Safe Drinking Water Act. NCDEQ has implemented rules restricting water use from certain aquifers in areas of eastern North Carolina. Although the Utilities Commission s primary water supply, which is the Tar River, is not affected by these restrictions, several neighboring communities are mandated to reduce their aquifer withdrawals and are seeking supplemental water supplies. Foresight and long range planning in the areas of water treatment and aquifer storage have positioned the Utilities Commission to form partnerships with these neighboring communities to provide water service to areas outside the traditional service area. The Utilities Commission has entered into contracts to deliver water to the neighboring communities of Bethel, Farmville, Stokes, Winterville and Greene County. 8

9 Water Rate Study. The water system s rate structure is designed to generate sufficient revenues to allow the water system to cover costs of water maintenance and operations and the portion of the debt incurred to finance water system improvements. Water rates are set to recover costs from each class of customers. Periodically the Utilities Commission contracts with an outside firm to review revenue requirements, rates and rate structure to ensure adequate recovery of costs. The most recent study was completed in the fall of Water Service Rates. Commercial and industrial base charges are the same as residential customers. Water rates in effect on June 30, 2016 are set forth below based on meter size and volume: Monthly Base Charge Meter Size Inside City Outside City ¾ $7.46 $ $12.20 $ ½ $23.03 $ $36.57 $ $79.90 $ $ $ $ $ $ $ $ $ $ $1, n/a $1, Volume Charge (per thousand gallons) Type of Service Inside City Outside City (a) Residential $3.78 $5.86 (b) Commercial $3.05 $4.73 (c) Industrial $2.85 $2.85 (d) Irrigation (Residential) $5.67 $8.79 (e) Irrigation (Commercial) $5.67 $8.79 (f) Irrigation (Industrial) $5.67 $5.67 Water rates effective July 1, 2016 are set forth below based on meter size and volume: Monthly Base Charge Meter Size Inside City Outside City ¾ $7.80 $ $12.76 $ ½ $24.08 $ $38.24 $ $83.56 $ $ $ $ $ $ $ $ $ $1, $1, n/a $1,

10 Volume Charge (per thousand gallons) Type of Service Inside City Outside City (a) Residential $4.00 $6.20 (b) Commercial $3.23 $5.01 (c) Industrial $3.02 $3.02 (d) Irrigation (Residential) $6.00 $9.30 (e) Irrigation (Commercial) $6.00 $9.30 (f) Irrigation (Industrial) $6.00 $6.00 Water Service Connection Fees. The Utilities Commission charges a one time Water Service Connection Fee. The connection fee consists of two components, a Water Tap Fee and a Water Capacity Fee. The purpose of the Water Tap Fee is to recover the cost of services, including the installation of water meters. The purpose of the Water Capacity Fee is to recover a proportionate share of the cost of capital facilities constructed to provide service capacity for new development or new customers connecting to the water system. The amount of the Capacity Fee component is based on the size of the water meter to be installed. The water service fee schedule set forth below is the same for locations inside and outside the City limits. The fees are reviewed annually by the Utilities Commission s Board and reviewed periodically by an outside consultant. The fee schedule in effect since October 1, 2008 is set forth below. Water Tap Size Tier 1* Tier 2** ¾ $1,089 $2,525 1 $1,613 $3,184 1 ½ $3,722 $5,171 2 $5,071 $6,520 * Tier 1 Service Connection Fee shall apply to those services for which the service lines are existing (service lateral and meter box). ** Tier 2 Service Connection Fee shall apply to those services which require the Utilities Commission forces to provide the service connection from the main water pipeline. The Tap Fee for all water services larger than 2, which are installed by the Utilities Commission, shall be billed at the total cost of labor and materials to install. Water Capacity Fee for services larger than 2 Water Meter Size Capacity Fee 3 $4,745 4 $7,605 6 $13,000 8 $39, $62, $93,145 10

11 Number of Connections Water System. The table below shows the number of water connections at the end of each of the last five fiscal years and the millions of gallons of water sold: Water Sold At June 30 Number of Connections (Millions of Gallons) ,514 3, ,742 3, ,959 3, ,179 3, ,599 3,970 The City has a mandatory water service connection policy in effect within the City limits. The City does not provide free water service to any customers. Substantially all developed areas within the City limits have City water service available. Major Users. The following table provides information on the largest users of the Utilities Commission s water system (by revenues) for the fiscal year ended June 30, 2016 TEN LARGEST WATER ACCOUNTS Fiscal Year ended June 30, 2016 Customer Product/Service Revenues % of Total Total k/gallons % of Total Town of Farmville Government $664, % 399, % Patheon Pharmaceuticals 649, , Town of Winterville Government 331, , Vidant Health* Health Care 272, , DSM Dyneema, LLC* High Performance Fibers 141, , DSM Dyneema, LLC* High Performance Fibers 97, , Fuji Silysia Chemical USA, Ltd. Silica Gel 92, , Stokes Regional Water Corp. Water Utility 90, , Vidant Health* Health Care 81, , Vidant Health* Health Care 72, , $2,494, % 1,065, % * Customers having separate accounts for different locations are listed separately. The Sanitary Sewer System The Utilities Commission operates a wastewater collection and treatment system that serves the City as well as some adjacent areas. In addition, the municipalities of Bethel and Grimesland, who have their own collection systems, have contracted with the Utilities Commission to treat the wastewater they collect. Mandatory connection is required by Utilities Commission rules and regulations which are incorporated into the City code by reference. The collection system consists of approximately 479 miles of line with 29,253 connections. The wastewater treatment plant was placed on line in 1985 and expanded in It is rated to biologically treat a 30 day average of 17.5 million gallons per day (MGD). The annual average daily biological flow during fiscal year ended June 30, 2016 was 11.2 million gallons of wastewater with a single day hydraulic maximum of million gallons. The wastewater treatment plant is regulated by the North Carolina Department of Environmental Quality ( NCDEQ ) Division of Water Resources, which enforces federal standards 11

12 through the National Pollutant Discharge Elimination system as defined in the Clean Water Act. The treatment plant routinely meets all federal and state regulatory standards. Treated wastewater is discharged into the Tar River. The Utilities Commission operates an Industrial Pretreatment program, which currently has six participants: Hyster Yale Group, Patheon (formerly DSM Pharmaceuticals, Inc.), DSM Dyneema, Inc., The Hammock Source, Fuji Silysia and Metrics Contract Services (a subsidiary of Mayne Pharma Group Limited). Sewer Rate Study. The sewer system s rate structure is designed to generate sufficient revenues to allow it to cover costs of sewer operations and the portion of the debt incurred to finance sewer system capital improvements. Sewer rates are set to recover costs from each customer class. Periodically the Utilities Commission contracts with an outside consultant to review the sewer system s revenue requirements, rates and rate structure to ensure adequate recovery of costs. The most recent rate study was completed in the fall of Sewer Service Rates. The Utilities Commission does not charge higher rates for users outside the City limits, however higher rates are charged for users who are provided water service by a water provider other than the Utilities Commission. The sewer volume charge is based on 93.5% of the monthly water usage billed by the provider. When the customer has provided a wastewater metering facility, the volume charge is based on 100 percent of the monthly metered wastewater discharged into the Utilities Commission s sewer system. Sewer rates in effect on June 30, 2016 are set forth below based on meter size and volume discharge: Monthly Base Charge Water Meter Size Utilities Commission Water Customers Sewer Only Customers ¾ $10.96 $ $17.97 $ ½ $34.01 $ $54.05 $ $ $ $ $ $ $ $ $ $ $1, $1, $2, Volume Charge (per thousand gallons) Type of Service Monthly Charge (a) Residential $5.32 (b) Commercial/Industrial $5.89 (c) Metered wastewater $6.49 (d) Municipalities $5.60 plus any other applicable charges included in the Interlocal Agreement, other Sewer Charge Schedules or the Commission s Utility Regulations 12

13 Sewer rates effective July 1, 2016 are set forth below based on meter size and volume discharge: Monthly Base Charge Water Meter Size Utilities Commission Water Customers Sewer Only Customers ¾ $11.70 $ $19.21 $ ½ $36.38 $ $57.84 $ $ $ $ $ $ $ $ $ $1, $1, $1, $2, Volume Charge (per thousand gallons) Type of Service Monthly Charge (a) Residential $5.66 (b) Commercial/Industrial $6.27 (c) Metered wastewater $6.91 (d) Municipalities $5.60 plus any other applicable charges included in the Interlocal Agreement, other Sewer Charge Schedules or the Commission s Utility Regulations Sewer Service Connection Fees. Sewer service connection fees are applicable to all customers who connect to the sanitary sewer system. Fees in effect on June 30, 2016 are set forth below: (i) Sewer Connection Fee This fee is intended to recover the cost of services (including the installation of sewer cleanouts) and a proportionate share of the cost of capital facilities constructed to provide service capacity for new development. Sewer Tap Size Tier 1* Tier 2** 4 w/ ¾ water meter $1,205 $4,114 4 w/ 1 water meter $1,653 $4,562 4 /6 w/ 1 ½ water meter $2,798 $5,707 4 /6 w/ 2 water meter $4,059 $6,968 * Tier 1 Service Connection Fee shall apply to those services for which the service lines are existing (service lateral and cleanout). ** Tier 2 Service Connection Fee shall apply to those services which require the Utilities Commission forces to provide the service connection from the main sewer pipeline. 13

14 Sewer Capacity Fee for services larger than 2 Meter Size Capacity Fee 3 $7,137 4 $12,200 6 $25,437 8 $36, $58, $87,413 (ii) Sewer Acreage Fee These fees are intended to recover the costs of providing sewer pipeline extensions and minor pumping stations, with a capacity of less than 1 MGD, constructed to serve a limited geographical area and is in addition to Service Connection Fees. This fee is typically paid by a developer. The Sewer Acreage Fee to be charged shall depend upon the location from which sewer service is provided. For all service except service provided through the Southwest Sewer Service Area Sewer System, the Sewer Acreage Fee shall be as follows: (a) (b) The Sewer Acreage Fee shall be $1,800 per acre except as provide in section (b). For any parcel which receives service through the Southwest Sewer Service Area Sewer System, the Sewer Acreage Fee shall be $2,900 per acre. Number of Connections Sewer System. The table below shows the number of sewer connections at the end of each of the last five fiscal years: At June 30, Number of Connections , , , , ,253 Major Users: The following table provides information on the largest users of the Utilities Commission s sewer system (by revenues) during the fiscal year ended June 30, 2016: TEN LARGEST SANITARY SEWER ACCOUNTS Fiscal Year ended June 30, 2016 Customer Product/Service Revenues % of Total Patheon Pharmaceuticals $1,017, % Town of Bethel Government 688, Vidant Health* Health Care 489, DSM Dyneema, LLC High Performance Fibers 471, Fuji Silysia Chemical USA, Ltd. Silica Gel 174, Vidant Health* Health Care 144, Vidant Health* Health Care 130, East Carolina University Education 104, East Carolina University Education 69, Province Greenville NC LP Apartments 67, * Customers having separate accounts for different locations are listed separately. $3,359, % 14

15 The Natural Gas System The Utilities Commission operates a natural gas distribution system that serves the City as well as some adjacent areas. The natural gas system consists of 614 miles of pipeline and 440 miles of service lines with 23,066 connections. During the fiscal year ended June 30, 2016 the Utilities Commission moved 3,078,656 dekatherms of natural gas through their distribution system. The Utilities Commission entered a ten year gas services agreement effective January 5, 2010 with Piedmont Natural Gas ( PNG ) that provides Firm Transportation, Excess Redelivery and Bundled Sales Peaking Services. The Utilities Commission secures its natural gas supplies through various marketers and transports the natural gas on a daily basis through Transcontinental Gas Pipe Line Corporation s transmission pipeline to PNG s gas system. The Utilities Commission routinely uses marketing firms to buy and sell natural gas contracts on its behalf. A Natural Gas Risk Management Policy, which includes a Hedging Plan and Credit Risk Policy, was developed by the Utilities Commission to mitigate the risks associated with purchasing natural gas on the New York mercantile Exchange ( NYMEX ). The Utilities Commission entered into a Supplemental Service and Construction Agreement with PNG effective November 1, 2014 for a period of 5 years. Under the terms of the contract the Utilities Commission will pay additional demand charges to cover the costs of upgrades to the Utilities Commission s system completed by PNG. The initial amount of the contractual payment was $470,000 per year. Effective June 2015 the amount was increased to $593,093 per year to reflect the actual costs of the upgrades. These additional demand charges are payable through October The Utilities Commission entered a fifteen year agreement with Patriots Energy Group ( PEG ) effective February 1, 2007 to purchase 20% of the Utilities Commission s firm volumes (2,000 dekatherms per day during the winter period, November through March). The Utilities Commission receives a price discount projected to be between $0.42 and $0.47 per dekatherm and pays an administrative fee of $0.015 per dekatherm to PEG to cover the administrative costs of the agreement. The Utilities Commission utilizes liquefied natural gas ( LNG ) as a supply source for peak day natural gas requirements. The utilization of LNG as a natural gas supply for peak day requirements is part of a long range plan to enhance the natural gas system's reliability, control natural gas costs and offer additional services to the Utilities Commission's customers. The Utilities Commission completed a permanent facility that stores and vaporizes LNG into gas in December An expansion of that facility, which doubled storage capacity, was substantially completed in the fall of 2001 and enhancements to the security features at the site were completed in A second expansion, completed in December 2006, doubled the send out capacity as well as adding redundancy and reliability to the operations of the facility. During fiscal year 2015 two additional storage tanks were installed at the facility bringing the total storage capacity to 330,000 gallons. The volume of LNG stored at the facility would supply our customers for more than a week should our gas supply be cut off due to an emergency. The policy of the Utilities Commission is to set natural gas system rates at a level to generate sufficient revenues to allow the natural gas system to be self supporting. To achieve such result, the Utilities Commission has adopted a purchased gas adjustment clause as a rate change mechanism to provide that all purchased gas costs incurred by the Utilities Commission are passed along to natural gas customers. 15

16 Natural Gas Rates. Natural gas service rates are the same for customers inside and outside the City limits. The natural gas rates in effect on June 30, 2016 are set forth below: Residential Service: A. Basic Facilities Charge (per billing month): $8.00 B. Commodity Charge (per ccf): First 20 ccf $ All additional ccf $ Residential Service Heat Only: A. Basic Facilities Charge (per billing month): $10.00 B. Commodity Charge (per ccf): First 20 ccf $ All additional ccf $ Commercial Service: A. Basic Facilities Charge (per billing month): $22.00 B. Commodity Charge (per ccf): First 50 ccf $ to 500 ccf $ All additional ccf $ Industrial Service: A. Basic Facilities Charge (per billing month): $ B. Commodity Charge (per ccf): First 500 ccf $ All additional ccf $ Interruptible Service: A. Basic Facilities Charge (per billing month): $ B. Commodity Charge (per ccf): Negotiated Seasonal Service A. Basic Facilities Charge (per billing month): $36.00 B. Commodity Charge (per ccf): First 100 ccf $ All additional ccf $ LNG Storage Service: A. Reservation Charge (per mcf per month): $1.62 B. Daily Demand Charge (per mcf per month): $7.25 C. Commodity Charge (per mcf): $12.55 All firm natural gas rates are subject to a purchased gas adjustment (PGA) schedule which provides for increases and decreases in customer rates commensurate with increases and decreases in commodity costs. Actual commodity costs are evaluated monthly to determine necessary changes to the PGA. The Utilities Commission has implemented one change in the PGA schedule since June 30, Natural gas rates in effect since November 1, 2016 are set forth below: Residential Service: A. Basic Facilities Charge (per billing month): $8.00 B. Commodity Charge (per ccf): First 20 ccf $ All additional ccf $

17 Residential Service Heat Only: A. Basic Facilities Charge (per billing month): $10.00 B. Commodity Charge (per ccf): First 20 ccf $ All additional ccf $ Commercial Service: A. Basic Facilities Charge (per billing month): $22.00 B. Commodity Charge (per ccf): First 50 ccf $ to 500 ccf $ All additional ccf $ Industrial Service: A. Basic Facilities Charge (per billing month): $ B. Commodity Charge (per ccf): First 500 ccf $ All additional ccf $ Interruptible Service: A. Basic Facilities Charge (per billing month): $ B. Commodity Charge (per ccf): Negotiated Seasonal Service A. Basic Facilities Charge (per billing month): $36.00 B. Commodity Charge (per ccf): First 100 ccf $ All additional ccf $ LNG Storage Service: A. Reservation Charge (per mcf per month): $1.62 B. Daily Demand Charge (per mcf per month): $7.25 C. Commodity Charge (per mcf): $12.55 Number of Connections Natural Gas System. The table below shows the number of gas connections by class at the end of the last five fiscal years: At June 30 Residential Commercial Industrial Interruptible Total ,164 2, , ,343 2, , ,455 2, , ,714 2, , ,899 2, ,066 Gas Consumption. The table below sets forth natural gas consumption for the last five fiscal years in hundreds of cubic feet (ccf): Fiscal Year Ended June 30 Residential Commercial Industrial Interruptible Total ,446,047 5,072,241 1,286,999 15,440,944 28,246, ,770,015 6,076,666 1,305,580 15,267,893 31,420, ,480,133 6,618,187 1,517,889 15,344,473 32,960, ,568,069 6,847,867 1,891,424 15,104,558 33,411, ,954,321 5,761,375 1,668,283 15,007,843 29,391,822 17

18 Major Users. The following table presents information on the largest users of the Utilities Commission s natural gas system (by revenues) during the fiscal year ended June 30, 2016: TEN LARGEST NATURAL GAS ACCOUNTS Fiscal Year ended June 30, 2016 Customer Product/Service Revenues % of Total Total Usage (ccf s) % of Total Patheon Pharmaceuticals $2,929, % 4, % East Carolina University* Education 2,038, ,228, Vidant Health* Health Care 1,456, ,205, DSM Dyneema, LLC* High Performance Fibers 891, ,195, DSM Dyneema, LLC* High Performance Fibers 700, , East Carolina University* Education 667, ,052, Vidant Health* Health Care 492, , Fuji Silysia Chemical USA LTD Silica Gel 405, , Metallix Inc. Precious Metals Refining 361, , Hyster Yale Group Fork Lift Trucks 360, , Total $10,305, % 14,982, % * Customers having separate accounts for different locations are listed separately. Billing and Collection Procedures The Utilities Commission uses electronic meter recording devices and an Automated Meter Reading (AMR) system to read water, electric, and gas meters for billing purposes. The meter reading and billing processes are divided into 16 cycles, which accordingly take 16 working days per month to complete. After each day s cycle is read, the readings are uploaded at night and an exception report is generated, which is analyzed the next day. All meters are read and billed on a monthly basis, and bills are mailed within two working days of the meter being read. Currently, bills are considered delinquent on the twentieth day after billing. Five days later a delinquent notice is mailed to the customer and a 1% fee is added to delinquent bills over $50. On the thirty fifth day, if the bill remains unpaid, the customer s electric service is disconnected and seven days later, if the bill is still unpaid, any additional services are disconnected. All unpaid final bills are turned over to a collection agency ninety days after the account closes. Before establishing service, utility customers must make application. During the application process, a security deposit is established based on the services provided as well as the customer's credit standing. The security deposits in effect on June 30, 2014 for residential service are as follows: Service(s) Deposit Water Only $ 50 Sewer Only 50 Gas Only 100 Electric Only 100 Electric & Water 150 Electric & Gas 200 Electric, Water & Gas